Cable & Wireless, the international telecommunications group, could become the lead corporate investor in the first Chinese telecoms group to open its doors to foreign capital after a Hong Kong flotation which is expected to value it at up to pounds 6bn.

Goldman Sachs, the US investment bank, is said to be working on plans for the stock market launch of China Telecom Hong Kong, which is to become the main vehicle by which China Telecom, the state operator, raises outside capital for development.

Such a move would represent an early payback for Dick Brown, C&W chief executive, following Friday's pounds 726m deal to sell a stake in the group's Hongkong Telecom subsidiary to China Telecom, when it was also promised a place as principal foreign investor in CTHK at some stage in the future.

It could also prove the catalyst for Mr Brown to realise his long-cherished aim of gaining membership of Global One, the rival international telecoms network to BT and MCI's Concert alliance, which includes his former employer, the US group Sprint.

Entry by C&W up to now has been blocked by Deutsche Telecom and France Telecom, which have argued that the British group has nothing to bring to the party. The possibility that it will be the first foreign group to demonstrate a significant presence in the world's most populous country may also pave the way for links with Nippon Telephone & Telegraph, the giant Japanese operator, which has been courted by all the main international telephone groups.

Signs that Friday's China Telecom deal is already thawing relations with Peking came yesterday in suggestions from Hong Kong yesterday that C&W was set to revive talks over the construction of a mobile phone network for the Chinese capital. The company is already working on a fibre- optic link between Peking and Hong Kong, which is set to transfer from British to Chinese control next month.

China Telecom Hong Kong will be the largest public share issue yet of any company with links to mainland China. The plan is for it to have certain assets of China Telecom injected into it before the flotation.

Neither Cable & Wireless nor Goldman Sachs would comment on the reports yesterday, but insiders said a flotation of CTHK would be an entirely logical development. One commented: "That company has been set up to take advantage of capital markets in Hong Kong and give foreign investors access to Chinese telecoms developments. Cable & Wireless will be the lead corporate investor in that company [putting] us into a unique position as the only non-Chinese telecoms investor in China Telecom Hong Kong and through that into the Chinese telecoms market itself."

According to C&W that market is growing at the rate of the equivalent of one British Telecom every 15 months.

Friday's deal involved C&W selling 5.5 per cent of its 59 per cent stake in Hongkong Telecom to China Telecom, with plans to reduce it in stages to reach parity with the Chinese.

Mr Brown promised then that this would not be the last announcement on the deal. "This establishes the platform for news to come later. It won't come in the weeks ahead, but certainly in the months ahead. There is much to be done and that's in the interests of both of us."

The reports come as Cable & Wireless Communications launches a single brand to replace those of Mercury, C&W's main UK subsidiary, and the three cable companies with which it has been merged.

By September the separate brand names will have disappeared in an operation which it knows must not confuse the public.

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